Thursday, February 14, 2008

Answer of the day

Knowledge@Wharton: Are some countries doing things better than others, which might offer lessons to the rest of the region?

Pack: Dubai seems to have a lot of things going for it. The quality of the people in Dubai is really quite astounding. We had an Executive Education program in Philadelphia over the last year and a half for officials from Dubai, and they were spectacularly good and spectacularly well plugged into the international economy. I think that's less true in other countries. Dubai cannot provide an easy template for the other countries because it has very specific circumstances in terms of oil revenues and other things per capita. Tunisia and Morocco have done okay.

None of the Middle Eastern countries have done spectacularly well, which is very interesting. In Latin America, Chile has done extremely well. Asia for a long time had Korea and Taiwan and then were joined by a host of other countries such as China and India, and now, interestingly, Vietnam. But there have been no champions of economic growth in the Middle East. This is disappointing, and therefore, there is not a sense of confidence that if they change policies they will succeed. There is no [one] country that has done spectacularly well.

On the other hand, one has to notice that Morocco, Tunisia and Egypt have not done that badly.

But there's also something more provocative:

Knowledge@Wharton: In fact, your book says that "The neural synapses that would link the latent productive possibilities of the Arab people with the goods and services demanded by the rest of the world appear to be weak or non-existent." How can that problem be overcome?

Pack: That sentence and the "neural synapses" phrase have drawn a lot of attention. We gave several presentations in Washington at The Peterson Institute and people brought this question up very frequently.

Currently, the big issue for most of the developing countries is that they want to become part of the world trading system. A large part of this system is dominated by production and buyer networks....

The Arab economies could become part of these networks, but so far they simply have not.

For more on what the authors are saying and meaning by neural synapses this is a helpful google search. This search also produces links to papers and talks related to their book.